Mt. Diablo schools admit budget errors

After six rounds of budget cuts, Mt. Diablo school board members and administrators now say that inaccuracies and errors riddled the financial documents used to make fiscal decisions earlier this school year.

In the budget adopted in June, some costs were miscategorized while others were counted twice, said Dick Nicoll, an assistant superintendent.

The district also set aside roughly $2 million less than the amount needed to cover actual costs in special education and other departments.

"There was an insufficient amount budgeted," said Nicoll, who took over district finances after the departure of former Chief Financial Officer Gloria Gamblin.

Along with past payroll blunders, the errors suggest serious accounting problems in the East Bay's second- largest school district.

"There are definitely mistakes," said board member Paul Strange, who called for an investigation into the district's books. "The question is what are the magnitude of the mistakes, and when are we going to bring them to the public so they can see them?"

Questions about Mt. Diablo's finances resurfaced after Strange and board member Gary Eberhart called for the superintendent's resignation in January. The concerns over accounting also coincide with a state fiscal crisis that has led schools across the state to slash their budgets.

The school board has cut more than $15 million and 145 positions since December, according to a budget report sent to the county Office of Education.

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Even with the reductions, which represented roughly 5 percent of the 2008-09 budgeted spending, the district will likely need to cut even more later this spring. The district expects to drop below a state-mandated level of reserves in 2009-10 barring a turnaround in the economy or voter approval of a parcel tax.

"We are still deficit spending," Nicoll said. "We can't do that forever."

While the district is receiving less money from the state next year due to state budget troubles, the budgeting and accounting errors have caused a money crunch of their own.

The district set aside less money this year than last year for special education students to attend private facilities even though the number of students enrolled in the outside placement program has increased.

In December, the school board authorized putting more money into the program, but it remains insufficient, Nicoll said.

An audit presented to the school board in February also raised red flags. For instance, auditors found that the district failed to record a $822,316 invoice for special education transportation from last school year.

The district must pay the amount though last year's books have closed.

Meanwhile, the district continues to struggle through budget season without an in-house business manager. Gamblin left on medical leave in November and retired from the district in February.

To save money, the school board voted to leave her cabinet-level position vacant until July 1. Later the board eliminated the job and replaced it with a lower-paying position.

It would have cost the district nearly $188,000 in salary and benefits to employ Gamblin next school year, according to records the Times obtained through the California Public Records Act.

In the meantime, to help clean up its accounting, the district will rely on Nicoll and consultant Linda Grundhoffer, the state trustee appointed to oversee the West Contra Costa school district as it repays a state bankruptcy loan.